Reading Comprehension – Test 148

Read the following passage carefully and choose the most appropriate answer to the questions out of five alternatives. <br><br> The new law to ban unregulated deposits is welcome. It makes sense to offer more legal protection to gullible depositors lured by Ponzi schemes: the law bars all deposit schemes that are not registered with the relevant regulators and lays down stringent punishment for running, as well as wrongfully inducing depositors to, unregulated deposit schemes and for fraudulently defaulting on regulated deposit schemes.<br><br> But the vital need is to address the fundamental problem of the formal financial sector's poor reach, financial illiteracy and poor governance. In the absence of formal finance, segmented, often informal and exploitative credit markets thrive, in which people pay high rates of interest on their borrowings, laying the ground for the expectations of unrealistic rates of return on their savings that pave the way to fraudulent deposit schemes. Take chit funds, for example. Savers in a closed group pool a fixed amount over a number of months. Any member who wants to borrow from the pooled saving must compete with other borrowers in the group and the person who bids the highest rate of interest gets the loan. Others who cannot access a chit turn to moneylenders, paying usurious interest rates. This explains why people, especially the poor, expect to earn high returns on their deposits as well. But those who are financially literate would find any scheme that offers eye-popping returns suspicious, and shun them. Chit funds are regulated and meet a genuine need in the absence of formal credit, but segment the credit market. <br><br> The focus must be on banking by mobile phone companies that have extensive presence far beyond the reach of bank branches. The government should ease the constraints that stifle their working, to ward off financial charlatans.

The new law is a threat for-

Read the following passage carefully and choose the most appropriate answer to the questions out of five alternatives. <br><br> The new law to ban unregulated deposits is welcome. It makes sense to offer more legal protection to gullible depositors lured by Ponzi schemes: the law bars all deposit schemes that are not registered with the relevant regulators and lays down stringent punishment for running, as well as wrongfully inducing depositors to, unregulated deposit schemes and for fraudulently defaulting on regulated deposit schemes.<br><br> But the vital need is to address the fundamental problem of the formal financial sector's poor reach, financial illiteracy and poor governance. In the absence of formal finance, segmented, often informal and exploitative credit markets thrive, in which people pay high rates of interest on their borrowings, laying the ground for the expectations of unrealistic rates of return on their savings that pave the way to fraudulent deposit schemes. Take chit funds, for example. Savers in a closed group pool a fixed amount over a number of months. Any member who wants to borrow from the pooled saving must compete with other borrowers in the group and the person who bids the highest rate of interest gets the loan. Others who cannot access a chit turn to moneylenders, paying usurious interest rates. This explains why people, especially the poor, expect to earn high returns on their deposits as well. But those who are financially literate would find any scheme that offers eye-popping returns suspicious, and shun them. Chit funds are regulated and meet a genuine need in the absence of formal credit, but segment the credit market. <br><br> The focus must be on banking by mobile phone companies that have extensive presence far beyond the reach of bank branches. The government should ease the constraints that stifle their working, to ward off financial charlatans.

Which of the following is not a critically needed improvement?

Read the following passage carefully and choose the most appropriate answer to the questions out of five alternatives. <br><br> The new law to ban unregulated deposits is welcome. It makes sense to offer more legal protection to gullible depositors lured by Ponzi schemes: the law bars all deposit schemes that are not registered with the relevant regulators and lays down stringent punishment for running, as well as wrongfully inducing depositors to, unregulated deposit schemes and for fraudulently defaulting on regulated deposit schemes.<br><br> But the vital need is to address the fundamental problem of the formal financial sector's poor reach, financial illiteracy and poor governance. In the absence of formal finance, segmented, often informal and exploitative credit markets thrive, in which people pay high rates of interest on their borrowings, laying the ground for the expectations of unrealistic rates of return on their savings that pave the way to fraudulent deposit schemes. Take chit funds, for example. Savers in a closed group pool a fixed amount over a number of months. Any member who wants to borrow from the pooled saving must compete with other borrowers in the group and the person who bids the highest rate of interest gets the loan. Others who cannot access a chit turn to moneylenders, paying usurious interest rates. This explains why people, especially the poor, expect to earn high returns on their deposits as well. But those who are financially literate would find any scheme that offers eye-popping returns suspicious, and shun them. Chit funds are regulated and meet a genuine need in the absence of formal credit, but segment the credit market. <br><br> The focus must be on banking by mobile phone companies that have extensive presence far beyond the reach of bank branches. The government should ease the constraints that stifle their working, to ward off financial charlatans.

Which of the following statements is not true?